Saturday, May 22, 2010

He Is Heavy. And He Ain't My Brother.

1. The beer case for welfare

2. The power of real brotherhood

Listening to the appalled German taxpayers wailing over Merkel's Greek Euro bailout, you can only thank your lucky stars we had the quite marvellous Mr Gordon Brown to keep us out. If it had been left to Bliar, Clarke, St Vince, and the BBC, we'd now be in the Euro and as stuffed as those North Rhine Westphalians.

German taxpayers have also worked out something their politicos won't yet admit - any bailout will simply be good money chucked after bad. There isn't a prayer the Greeks will suddenly become good Lutheran hausfraus, tightening the family belt to live within budget.

And remember this - German taxpayers have recent experience of just how expensive this kind of support can be. The cost of German reunificiation is now put at 1.3 trillion Euros, which was getting on for one year's GDP when the Wall came down. That was much more than originally suggested by the politicos, and in one way or another, most of it came from West German taxpayers.

There was considerable anger about that as well. The industrious Wessies were not at all happy to find themselves milked for years to support the idle Ossies.

But of course there was one gigantic elephant size difference from the present situation - the Ossies were fellow Germans (or as the Major would put it, fellow members of the Master Race). There was a powerful bond of history and culture. They were brothers.

We're not in that situation here. Northern European taxpayers are not going to stand funding a permanent welfare regime for the South. Yes, of course, the political euroclass are wedded to ever closer union, and may even welcome the idea of binding in the PIGS via permanent welfare dependency. But sooner or later, their taxpaying voters are going to rebel. And as things look today, that might be sooner rather than later.

Which brings us to the fascinating session Tyler had with a group of Tory activists last evening. It was a political discussion group, and on the table was the small matter of how we're going to solve our own fiscal crisis.

We spent an hour and a half running through all the main options, and you know the one that generated most interest?

No, it wasn't abolishing quangos. Or cutting public sector pensions (although that did feature). Or scrapping the NHS supercomputer. Or even leaving the EU (although that too did feature).

The single most popular idea was fundamental reform of the £200bn pa welfare system (that's reform as in cutting expenditure). Discussants raised all the various issues we've blogged so often here on BOM - benefits that are so high they are a disincentive to work - even in a high employment town in Surrey - the unfairness of benefit families being able to furnish themselves with 50 inch plasmas that their working neighbours cannot afford, the housing priority given to people who won't help themselves, the ludicrous overpaying for private rental property via housing benefit (the local premium is reckoned to be c20%), etc etc.

Most of all there was a feeling that those who work hard and pay their taxes are being taken for a ride. Nobody minds helping those who genuinely cannot help themselves, but we've drifted far beyond that. As one member of the group explained, benefits are far too high because we've been duped by a bunch of self-serving left-wing politicos who, once real poverty had been conquered in the 50s, invented the concept of relative poverty to save their own political skins. And he should know- he was once a member of the Communist Party.

Who then is my brother?

Well, my brother is my brother, obviously. And most of us feel a natural and strong obligation to help a real brother in trouble.

But the Greeks?

Well, no not really. Sure, they're perfectly nice people, and if they got whacked by a natural disaster, we'd all put our hands in our pockets - there but for the grace of God, etc. But a fiscal crisis caused by years of living too high on the hog, maxxing the credit cards and fiddling the bank statements? That's not something Tyler feels terribly inclined to help with. Lessons have to be learned.

The Germans? Well, we laughed as we listened to some stern looking German politico last night warning that if we don't help them with the bailout costs, it will be the worse for us if we ever need help. We were remembering the last time we wanted their help during the 1992 currency crisis and how they told us to get stuffed (even though as things turned out they actually did us a gigantic unintended favour - see this blog).

Once again, the Germans are perfectly reasonable people, they make excellent cars, and they are people with whom we can very confortably do business. But when it comes to subsidising them, they ain't any brother of Tyler.

Which just leaves those we subsidise and support here at home. Are they our brothers? And even if they are, are we really helping them by incentivising them to spend all day having kids, drinking loss-leading lager, and watching Trisha on the 50 inch?

Tricky.

But probably not that tricky.

What we desperately need is that much promised root and branch reform of welfare, now being steered along by Iain Duncan Smith. Not only should it reduce the weight of all our brother support, but crucially, it must provide some real incentive for the brothers to rise from their butts.

PS Yes, I am quite aware that this kind of thinking is what got the nasty party its name, and I'm not imputing any of these views to party members past or present. Other than Tyler and the Major, that is.

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Despite all the talk of cuts, government still consumes nearly half our national income. Yet many tens of billions of its spending is wasted, with taxpayers made to pick up the tab for a depressing array of overpriced sub-standard services. This is money we can no longer afford, and our National Debt is already at danger level.

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